Black Hills Corp. could complete its $940 million utility acquisition from Aquila early in the second quarter of 2008, according to David Emery, Black Hills Corp.'s chief executive officer.
The Black Hills Corp. purchase is part of a two-step deal in which Aquila, a Kansas City, Mo., based utility, would merge with another Kansas City firm, Great Plains Energy. Then, Black Hills Corp. would buy Aquila's natural-gas operations in Colorado, Kansas, Nebraska and Iowa and its Colorado electric utility.
"We've made a lot of progress after the announcement of the Aquila deal," Emery said Friday morning during a conference call with stock analysts.
The agreement has won the approval from stockholders at both Aquila and Great Plains Energy. It has also received the blessing of state and federal regulators. Only Kansas and Colorado regulators must sign off on the Black Hills Corp. purchases. Kansas and Missouri must still approve the Great Plains-Aquila merger.
The three companies announced the agreement one year ago this week. Black Hills Corp. had originally hoped to complete the acquisition in the first quarter of 2008.
The Aquila-Great Plains Energy part of the deal had been stalled in proceedings before the Missouri Public Service Commission since December. But Emery said he believes the process will get back on track.
Meanwhile, he said, Black Hills Corp. is working to prepare for completion of the deal. The company is setting up a call center in Rapid City, setting up a new data center and preparing for new employees who will join the company after the deal is completed.
Black Hills Corp. would grow from a small regional firm with 137,000 customers, mostly in the Black Hills and the Cheyenne, Wyo., areas into a large Midwestern utility with 753,000 customers in six states.
Its overall work force will increase to more than 2,000 from the 916 workers it has now. The company has already announced plans to hire 175 new workers in Rapid City.
On Thursday, Black Hills Corp. announced it had fourth-quarter 2007 earnings of $24.8 million, or 65 cents per share, from continuing operations. That compares with $20.9 million, or 62 cents per share, in the fourth quarter of 2006.
For the year, Black Hills Corp.'s net income was $98.8 million, or $2.64 per share, compared with $81 million, or $2.42 per share, for the same period in 2006.
Income from continuing operations was $100.1 million, or $2.68 per share, compared with $74.0 million, or $2.21 per share, in 2006.
The 2007 results were affected by:
* A $16.9 million increase in energy marketing earnings
* A $6.2 million increase in electric utility earnings
* A $1.5 million increase in power generation earnings
* A $1.3 million increase in electric and gas utility earnings
* A $400,000 increase in corporate costs.
Emery told analysts that a review of the company's independent power-generation assets is under way, and it could result in the sale of some of those assets. The independent power plants generate electricity for other utilities in other places includingLas Vegas.
"We would expect to make a decision related to the possible sale of certain of these assets during the second quarter of 2008," Emery said.
Overall, Black Hills Corp. is forecasting 2008 earnings to be in the $2.35- to $2.55-per-share range.
Contact Dan Daly at 394-8421 or dan.daly@rapidcityjournal.com
